Aielyn on 29 December 2012
| HappySqurriel said: @Aielyn I don't think you understand ... Up until the 1980s the marginal income tax rate on the wealthiest Americans was very high, but there were a lot of write-offs and loopholes that dramatically lowered the effective tax rate. In the 1980s the tax code was changed dramatically to eliminate these loopholes and reduce the marginal tax rate. If the United States increased tax rates to the level of the 1960s without re-introducing the loopholes it will cause substantal negative impacts to the economy due to capital flight. |
As the graph I provided in a post a couple back demonstrated, even with all of those loopholes, etc, the top 0.1% and 0.01% were still paying a much larger amount of tax than they are now.
I am not suggesting that America should return to 90% tax rates for the uber-wealthy. That would be excessive. But America could comfortably raise it to as high as 50%, bringing it into the same vicinity as most western nations, without causing any issues.
Of course, Capital Gains tax also needs to be fixed - that's an intentional loophole put into the system to benefit the uber-wealthy, and all evidence shows that it has not helped to encourage investment - it has only served to reduce the tax burden for multimillionaires and billionaires.
